In The News 5-13-2005

G2 Switchworks recently blasted what it called ASTA’s “baseless claims” about the company’s ownership of technology. In letters issued May 2 to the Justice and Transportation departments, ASTA urged the agencies to probe the airlines’ possible future ownership and control of the start-up.

“There is an indication that the airlines are once again poised to involve themselves in the ownership and, possibly, control of significant influence of a firm with GDS-like characteristics,” ASTA’s letter stated.

G2’s CEO responded by defending the company.

“We were disappointed to be the subject of baseless claims by ASTA,” Alex Zoghlin said in a statement. “It is further disappointing to note that ASTA never contacted G2 to learn the facts ... before making their uninformed statements.”

Zoghlin noted that he and company employees control the majority equity and voting interests in G2. Norwest Venture Partners and Texas Pacific Group Ventures made a $10 million minority investment and hold two seats on the G2 board of directors.

Seven airlines designated the Chicago-based company as an alternative GDS provider, and six of the airlines prepaid for millions of tickets in exchange for the opportunity to take a small equity stake and discounted fees.

“G2 was not founded, nor is it funded or controlled by any individual or airline or collection of airlines,” Zoghlin said. “The airlines that have agreed to prepay G2 for distributing tickets will receive the opportunity to hold a very small collective equity stake in G2 and will not receive ... the ability to designate any member to G2’s board of directors or otherwise direct G2’s strategic planning or day-to-day operations.”

American, America West, Continental, Delta and Northwest prepaid up to 8 million tickets, G2 said. United signed on a few days later, but G2 won’t say how many tickets United prepaid. And US Airways tapped G2 for distribution but didn’t pay for tickets up front.

The arrangement also raised concern at the Association of Retail Travel Agents (ARTA), which issued a statement supporting ASTA and asking the government to “re-examine these airlines’ back-door efforts to strengthen their anticompetitive control over the airline reservations marketplace.”

United Airlines received bankruptcy court approval this month to terminate its defined-benefit pension plans for employees, but the victory could come at the cost of an angry and disillusioned workforce. United insisted it had no choice but to seek termination of the plans, which will be taken over by the federal Pension Benefit Guaranty Corp. but with substantially reduced benefits, up to 60 percent in some cases. In a message to employees, United CEO Glenn Tilton called the pension termination “difficult but necessary” and made an appeal for labor peace. It’s unclear, however, how well Tilton’s message will go over with employees. The pension cuts, coming on top of wage and benefit concessions, have outraged many employees and could prompt a strike. United’s parent company UAL reported a $1.1 billion loss for first-quarter 2005.

Some travel agents can look forward to new perks. Happy Vacations this month launched the Partnership Education Recognition Klub, or Perk, which allows participants to earn points for bookings with Happy Vacations for travel after May 1. The company credits agents’ accounts with points equal to 5 percent of their bookings; Perk members can cash in their points for personal travel or for continuing education at the Travel Institute relating to destinations that Happy sells. www.happy-vacations.com